Chapter 3Filing Information for Individuals in Certain U.S. Possessions(p10)

If you have income from American Samoa, the CNMI, Guam, Puerto Rico, or the USVI, you may have to file a tax return with the tax department of that possession. Or, you may have to file two annual tax returns, one with the possession's tax department and the other with the U.S. Internal Revenue Service. This chapter covers the general rules for filing returns in the five
possessions.

You must first determine if you are a bona fide resident of the relevant possession. See
chapter 1 for a discussion of the requirements you must meet.

You should ask for forms and advice about the filing of possession tax returns from that possession's tax department, not the Internal Revenue Service. Contact information is listed in this chapter under the heading for each
possession.

Your residency status and your source of income with regard to American Samoa determine whether you file your return and pay your tax to American Samoa, to the United States, or to
both.

In addition to the information below that is categorized by residency status, the
Special Rules for American Samoa
section (later) contains important information for determining the correct forms
to file.

If you are a U.S. citizen or resident alien and a bona fide resident of American Samoa during the entire tax year, you generally must file the following returns.

An American Samoa tax return reporting your gross income from worldwide sources. If you report non-American Samoa source income on your American Samoa tax return, you can claim a credit against your American Samoa tax liability for income taxes paid on that income to the United States, a foreign country, or another possession.

A U.S. tax return reporting income from worldwide sources, but excluding income from sources within American Samoa. However, amounts received for services performed as an employee of the United States or any of its agencies cannot be excluded (see
U.S. Government employees under
Special Rules for American Samoa, later).
To exclude American Samoa source income, attach a completed Form 4563 to your U.S. tax return (see
Form 4563
for more information). If you are excluding American Samoa source income on your
U.S. tax return, you will not be allowed any deductions from gross income or
credits against tax that are directly or indirectly allocable to the exempt
income. For more information, see
Special Rules for Completing Your U.S. Tax Return in chapter 4.

If you are a bona fide resident of American Samoa during the entire tax year, but a nonresident alien of the United States, you generally must file the following returns.

An American Samoa tax return reporting worldwide income.

A U.S. tax return (Form 1040, U.S. Individual Income Tax Return) reporting income from worldwide sources, but excluding American Samoa source income other than amounts for services performed as an employee of the United States or any of its agencies. For more information, see
U.S. Government employees under
Special Rules for American Samoa, later. To exclude income from sources within American Samoa, attach a completed Form 4563 to your U.S. tax return (see
Form 4563, below, for more information).
For all other tax purposes, however, you will be treated as a nonresident alien individual. For example, you are not allowed the standard deduction, you cannot file a joint return, and you are not allowed a deduction for a dependent unless that person is a citizen or national of the United States. There are also limitations on what deductions and credits are allowed. See Publication
519 for more information.

If you must file a U.S. income tax return and you qualify to exclude any of your income from American Samoa, claim the exclusion by completing Form 4563 and attaching it to your Form 1040. Form 4563 cannot be filed by itself. There is an example of a filled-in Form 4563 in chapter
5.

If you are not required to file a U.S. tax return but have income that is effectively connected with a trade or business in American Samoa, you must file Form 1040-SS with the United States. On this form you will report your self-employment income to the United States and, if necessary, pay self-employment tax on that income.

An individual who is not a bona fide resident of American Samoa for the tax year generally files both U.S. and American Samoa tax returns, and claims a foreign tax credit on the U.S. return for taxes paid to American
Samoa.

If you are a U.S. citizen or resident alien but not a bona fide resident of American Samoa during the entire tax year, you generally must file the following returns.

An American Samoa tax return reporting only your income from sources within American Samoa. Wages for services performed in American Samoa, whether for a private employer, the U.S. Government, or otherwise, is income from sources within American
Samoa.

A U.S. tax return reporting your income from worldwide sources. You can take a credit against your U.S. tax liability if you paid income taxes to American Samoa (or other possession or foreign country) and reported income from those sources on your U.S. tax
return.

If you are a nonresident alien of the United States who does not qualify as a bona fide resident of American Samoa for the entire tax year, you generally must file the following returns.

An American Samoa tax return reporting only your income from sources within American Samoa. In this situation, wages for services performed in American Samoa, whether for a private employer, the U.S. Government, or otherwise, is income from sources within American
Samoa.

A U.S. tax return (Form 1040NR, U.S. Nonresident Alien Income Tax Return) reporting U.S. source income according to the rules for a nonresident alien. See the instructions for Form
1040NR.

If, under the rule discussed at the beginning of chapter 1 (see
Special rule for civilian spouse of active duty member of the U.S. Armed
Forces), your tax residence is American Samoa, follow the guidance in the section for
bona fide residents under
Which Returns To File, earlier. However, if your tax residence is one of the 50 states or the District of Columbia and your only income from American Samoa is from wages, salaries, tips, or self-employment, you will be taxed on your worldwide income and file only a U.S. tax return (Form 1040) and a state and/or local tax return, if required. If you have income from American Samoa other than wages, salaries, tips, or self-employment that is considered to be sourced in that possession (see
Table 2-1), contact the local tax administration for guidance.

If you are employed in American Samoa by the U.S. Government or any of its agencies, you are subject to tax by American Samoa on your pay from the government. Whether you are subject to tax by American Samoa on your non-American Samoa source income depends on your status in American Samoa as a bona fide
resident.

Wages and salaries paid to employees of the U.S. Government and its agencies are also subject to U.S. federal income tax. These payments do not qualify for the exclusion of income from sources within American Samoa, discussed
earlier.

For tax years ending after April 9, 2008, wages and salaries paid to bona fide residents by the Government of American Samoa can be excluded on the U.S. tax
return.

If you report government wages on both your U.S. and American Samoa tax returns, you can take a credit on your U.S. tax return for income taxes paid or accrued to American Samoa. Figure the credit on Form 1116, and attach that form to your U.S. tax return, Form 1040. Show your wages paid for services performed in American Samoa on Form 1116, line 1a, enter "American Samoa" on line g, and check box b above Part
I.

Generally, expenses of a move to American Samoa are directly attributable to American Samoa wages, salaries, and other earned income. Likewise, the expenses of a move back to the United States are generally attributable to U.S. earned
income.

If your move was to American Samoa, report your deduction for moving expenses as follows.

If you are a bona fide resident in the tax year of your move, enter your deductible expenses on your American Samoa tax
return.

If you are not a bona fide resident, enter your deductible expenses on both your American Samoa and U.S. tax returns. Also, for purposes of a tax credit against your U.S. tax liability, reduce your American Samoa "general category income" on Form 1116, line 1a, by entering the deductible moving expenses on line
2.

If your move was to the United States, complete Form 3903, Moving Expenses, and enter the deductible amount on Form 1040, line 26.